Nasdaq sinks, Dow edges up after healthy big bank earnings: Stock market news today

• Stocks close mixed as earnings season kicks off

  Wall Street finished the week with mixed results, as investors digested the results from big banks and a sour reading on consumer sentiment that clung to concerns over inflation. The indexes overall posted weekly results that were also a mixed bag.

  The S&P 500 (^GSPC) edged lower by about 0.5%, while the Dow Jones Industrial Average (^DJI) gained 0.12% or 40 points. The tech-heavy Nasdaq Composite (^IXIC) lost 1.2%. For the week, the S&P and the Dow posted overall gains. But the Nasdaq finished slightly under last week’s levels.

• A look at the week ahead

  As the market wraps its second week of trading in October, earnings season is ramping up. The schedule of quarterly reports is packed for the days ahead, including earnings from Netflix, Tesla, Bank of America and AT&T. Investors will also have fresh economic data to grapple with, alongside remarks from Fed Chair Jerome Powell. Yahoo Finance’s Brent Sanchez has a graphical breakdown of what to watch next week:

• The Fed’s next ‘rate hike’ has already arrived

  Some Fed officials see rising Treasury yields as a mechanism to slow the economy without having to go through the trouble of raising rates again. In effect, elevated yields can do the work of central bankers for them — functioning as a rate hike without instituting an actual rate hike.

  And this isn’t the first time a phantom rate hike has crept its way through the economy. In March Fed Chair Jerome Powell noted that the bank failures and associated turmoil essentially acted as another rate hike.

  But as with the Fed’s previous rate increases, a rise in inflation or other unfavorable observations could force the central bank to move. And if yields slide, their tightening effect would diminish, creating a greater need for the Fed to enact a genuine hike instead of relying on a substitute.

• Big banks report strong earnings amid higher rates

  The nation’s largest banks appear to be thriving as the market settles into an era of “high for longer” interest rates, as the Fed attempts to pull inflation down to its 2% target.

  On Friday a host of banks reported robust earnings.

  Profits for JPMorgan Chase (JPM) surged in the third quarter, reinforcing its dominance in the sector, despite the headwinds facing banks this year. The New York giant reported earnings of $13.2 billion that were up 35% from the same period a year ago. Its revenue of $40.7 billion was up 21%. Its net income and revenue beat Wall Street expectations. Shares rose about 2%.

  Citigroup (C) and Wells Fargo (WFC) also beat earnings on Friday.

  Citigroup, whose shares rose nearly 2% reported profits that were broadly steady as it reaped the benefits of a rise in trading revenue and investment banking fees. Shares of Wells Fargo gained more than 2% after the company reported that profits rose in the third quarter as customers paid out higher interest on loans. Revenues for the quarter increased more than 20% compared to the same period last year.

• Stocks trending in afternoon trading

  Here are some of the stocks leading Yahoo Finance’s trending tickers page in afternoon trading on Friday:

  Dollar General (DG): Shares rose more than 10% Friday afternoon following news that the company will bring back former CEO Todd Vasos to lead the discount retailer.

  JD.com (JD): The e-commerce company fell nearly 4% after several banks cut their price targets and revenue estimates for the company’s third quarter.

  JPMorgan (JPM): Shares gained 4% on Friday afternoon after a strong earnings report showed that profits surged in the third quarter. Wells Fargo (WFC) and Citigroup (C) also beat earnings estimates.

  Boeing (BA): The aerospace and defense giant lost almost 3% during afternoon trading after a report that the plane maker is expanding inspections of production flaws in the 737 Max aircraft, which could further delay deliveries of the jet.

• Stocks mixed in afternoon trading

  Wall Street gave up some of its gains Friday afternoon, as investors digested the results from big banks and a reading on consumer sentiment that fell on concerns over inflation.

  The S&P 500 (^GSPC) edged lower by about 0.2%, while the Dow Jones Industrial Average (^DJI) gained 0.4% or 140 points. The tech-heavy Nasdaq Composite (^IXIC) lost 0.8%.

• Inflation concerns flare up for American consumers

  Consumers are feeling worse about the economy even as the likelihood of a November or December rate hike creeps downward, heightening the attention on the Fed’s efforts to bring down inflation.

  The University of Michigan Consumer Sentiment Index registered a 7% drop for its first October reading. “Nearly all demographic groups posted setbacks in sentiment, reflecting the continued weight of high prices,” said Joanne Hsu, director of the university’s Surveys of Consumers.

  The dark turn in current events, from the turmoil in Congress over who will serve as the next Speaker of the House to the escalating violence in the Israel-Hamas conflict, likely weighed on the mindsets of consumers, according to a note by analysts at Wells Fargo, published Friday.

  The more pessimistic feelings coincides with a dwindling likelihood of a rate hike later this year. Just a day before the survey was released, the latest inflation report on Thursday showed that prices in September rose at roughly the same pace seen in August. The data bolstered the case that the Fed still has a ways to go to pull inflation back down to its 2% target.

  Still, markets were indicating the Fed will likely hold rates steady in November. And even in December chances are shrinking that the Fed will raise rates then. As of Friday morning, markets were pricing in a 92% chance the Fed hold rates where they are in November, data from the CME Group show. The chances of a December rate hike fell, however, to about 30% from roughly 37% a week ago.

• Microsoft closes $69 billion takeover of Activision Blizzard

  The largest-ever merger in the gaming market has closed, bringing an end to a protracted battle with government regulators over concerns of consolidation and competition.

  Microsoft (MSFT) on Friday finalized its $69 billion purchase of “Call of Duty” maker Activision Blizzard (ATVI), according to a regulatory filing from the company Friday, in what is the largest-ever merger for the gaming market, Yahoo Finance’s Alexis Keenan and Daniel Howley report.

  The deal closed after Microsoft cleared a final hurdle from the UK’s Competition and Markets Authority (CMA). The regulator said concessions proposed in a revised acquisition agreement with Activision satisfied the antitrust regulator’s concerns that the transaction would give Microsoft an unfair advantage in the cloud gaming market.

  “The new deal will stop Microsoft from locking up competition in cloud gaming as this market takes off, preserving competitive prices and services for UK cloud gaming customers,” the CMA said in a press release.

  The deal makes Microsoft the third-largest video game company in the world by revenue behind Sony (SONY) and Tencent.

• J

  Consumer sentiment tumbles in October

  Sticky inflation, rising yields and a slumping stock market are taking a toll on how consumers feel about the current state of the US economy.

  The first October reading of the University of Michigan Consumer Sentiment Index showed a reading of 63, down from 68.1 in September. The 7% drop was the largest one month move downward since the regional banking crisis in March.

  After several sticky inflation reports, Americans aren’t feeling as bullish about inflation’s path downward, either. One year-inflation expectations are now for prices to grow 3.8% over the next year. Last month consumers had projected inflation of 3.2%.

  “Assessments of personal finances declined about 15%, primarily on a substantial increase in concerns over inflation, and one-year expected business conditions plunged about 19%,” Surveys of Consumers Director Joanne Hsu said in the survey release.

• Stocks trending in morning trading

  Here are some of the stocks leading Yahoo Finance’s trending tickers page in morning trading on Friday:

  Broadcom (AVGO): Shares of the semiconductor company continued their climb Friday morning, rising 0.8%, following news that Broadcom’s acquisition of the cloud computing company VMware (VMW) is likely to be approved by Chinese officials.

  Boeing (BA): The aerospace and defense giant lost 3% during morning trading after a report that the plane maker is expanding inspections of production flaws in the 737 Max aircraft, which could further delay deliveries of the jet.

  JPMorgan (JPM): Shares gained 4% on Friday morning after a strong earnings report showed that profits surged in the third quarter. Wells Fargo (WFC) and Citigroup (C) also beat earnings estimates.

  UnitedHealth (UNH): Shares were up over 2% after it reported a third-quarter profit on Friday that beat analysts’ estimates on lower-than-expected medical costs.

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